The Wall Street Journal-20080130-J-P- Morgan Sets China Venture

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J.P. Morgan Sets China Venture

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BEIJING -- J.P. Morgan Chase & Co. said it will offer commodities- futures trading services through a brokerage joint venture being established with a partner from Guangdong province, Zhongshan Futures Co.

The move comes as China's futures market has expanded rapidly with the debut of gold futures at the beginning of this year and more derivative products expected to be launched later this year.

The venture plans to deal in commodities futures ranging from agricultural products to metals and oil, said Lisa Liang, a Beijing- based spokeswoman for the U.S. investment firm.

J.P. Morgan is entering a market that has been dominated by Chinese firms through the joint-venture brokerage firm, which will offer trade-execution and clearing services.

Ms. Liang said J.P. Morgan would like to expand into financial futures such as the stock-index futures that are expected to be launched soon, though it is unclear what role the government will allow foreign firms to play in that market.

The joint venture gives J.P. Morgan clients access to China's three major commodities exchanges for the execution and clearing of commodities-derivative contracts, the U.S. investment firm said in a statement.

The venture plans to start operating in commodities futures around the end of March, Ms. Liang said. The parties received approval for the venture in September from the China Securities Regulatory Commission.

Ms. Liang declined to disclose the shareholding structure of the joint venture but said "there is no single party controlling the joint venture." The final structure is still being worked out, she said.